Westpac agrees to buy Lloyds' Australian assets for $1.4 billion

SYDNEY (Reuters) - Westpac Banking Corp (WBC.AX), Australia’s second biggest bank by market capitalisation, said on Friday it had agreed to buy Australian assets from Lloyds Banking Group (LLOY.L) for A$1.45 billion ($1.37 billion).

The deal, Westpac’s largest acquisition since its 2008 takeover of St George Bank, will extend the Australian bank’s reach in motor vehicle finance, equipment finance and corporate lending.

The asset sale had been viewed as an opportunity to pick up assets on the cheap, at a time when Lloyds is refocusing on its operations in Britain.

“This is a value creating, straightforward transaction that makes both commercial and strategic sense,” Westpac Chief Executive Gail Kelly said in a statement. “These are strongly performing businesses that we know well and that will expand our reach and capability in target segments.”

Westpac said full-year earnings per share in 2014 would benefit but it did not quantify the improvement. The internally funded deal will add A$100 million to cash earnings by 2015, the bank said.

Westpac won the auction after rivals Macquarie Group Ltd (MQG.AX) and a consortium led by Pepper Australia and GE Capital (GE.N) dropped out of the race.

The corporate loan book, motor and equipment financing businesses purchased by Westpac have a face value of A$8.4 billion, the Australian bank said.

Westpac’s shares were up 1.9 percent at A$32.81 in early trade, in line with its Australian banking peers.

Westpac said it did not require regulatory approvals for the deal, which it expected to complete by the end of the year, but added that it was cooperating with an informal merger review by the Australian competition regulator.

Given Westpac’s size in the Australian market, the deal had been expected to attract attention on competition grounds.

The sale was part of Lloyds’ global strategy to cut costs and shrink its international network to refocus on lending in the British domestic market.